Industry Claims That Cord Cutting Would Be A Fad Aren't Looking So Hot

from the adapt-or-perish dept

Remember when the cable industry used to pretend that cord cutting wasn't real? Or perhaps you remember that once the industry was actually willing to admit it was a real trend, they'd claim it was only something being done by losers living in their parents' basement?

Or perhaps you'll remember the cable and broadcast industry claims that cord cutting was just a temporary phenomenon that would go away once the housing markets stabilized and Millennials started procreating? Or how companies like ESPN routinely claimed that warnings about the trend were an unimportant fiction that should be ignored?

Good times.

While there are still a few sector analysts and executives here and there who'll bizarrely try to downplay one of the biggest trends in TV industry history, the numbers keep making it harder and harder to keep one's head buried a foot below ground. Last year, for example, once again saw one of the highest defection rates of traditional TV subscribers in recent memory. According to Wall Street analysts, the top pay TV providers lost 2.5 million subscribers last year alone:

Ironically the two companies that actually tried to adapt to the cord cutting trend suffered the worst losses. Both AT&T and Dish have launched DirecTV Now and Sling TV, respectively, in a bid to try and at least hoover up a few of these fleeing customers with their own streaming services. That's something to be applauded, especially since huge swaths of the sector have simply responded by doubling down on terrible ideas (from raising rates to fighting against real cable box competition). But even with adaptation, users are still fleeing to other alternatives (Amazon, Hulu, Netflix) instead.

It's not going to be getting any easier for entrenched pay TV providers, especially the ones that stubbornly refuse to compete on price. The streaming market will soon face a new rival in the form of Apple's and Disney's new Disney+ streaming service, which will be the exclusive home of most Star Wars, Marvel, Pixar, and Disney children's' programming:

"The clear implication is that year-over-year subscriber trends for programmers that improved throughout 2018 are set to worsen again in 2019,” Greenfield wrote. The analyst is widely known as bearish on the pay-TV sector, frequently using the hashtag #goodluckbundle in his commentary (as he did in Wednesday’s post). The cord-cutting problem promises to grow even more exacerbated as new subscription-streaming services from Disney (Disney+), WarnerMedia and NBCUniversal hit the market starting later this year. Those will via for consumers’ entertainment dollars against SVOD players like Netflix, Hulu, and Amazon Prime Video."

So if companies like AT&T and Dish are actually trying to adapt to reality, why are they seeing such major departures? Many of these users were on unrealistically cheap discounted promotions intended to drive adoption that ended. And some users were frustrated by the a price hike by AT&T in the wake of its latest megamerger with Time Warner. New streaming companies are also actually good at customer service, something the cable and broadband industry hasn't been able to get a handle on for the better part of a generation.

Between tight margins and an ocean of new arrivals, it's going to be pretty hard for the cable industry to make anywhere near the same profits they were used to during the heyday of cable TV. But that's generally how competition works. And you shouldn't feel too badly for the Comcasts of the world, since their solution will simply be to jack up the cost of broadband, where competition is far weaker. Still, there's a subset of executives who still seem to somehow believe they're owed a permanent position of dominance without having to work for it. That delusion is falling apart more quickly than most of them expected.

Filed Under: cable, cord cutting, over the top, streaming

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  1. identicon
    Anonymous Coward, 21 Feb 2019 @ 7:58am

    Re: Re: yeah but...

    Instead of paying $250 / month for internet/cable/phone you'll pay $250 / month

    Maybe eventually but generally most cable companies charge you around $100 for just internet. DSL is even cheaper, though also slower, but can vary based on how far out you are. Do you have some statistics to show that ISPs are regularly charging people $250 for just internet?

    And as streaming proliferates every broadcaster/studio will end up being a separate stream that will cost you $10-$15/month on top of that.

    Maybe they will, maybe they won't. Individual broadcasters are trying that right now and it's not working out so well for them. Regardless, you don't have to sign up for every single streaming service, and most people don't. This is also what people who deride cord cutting tend to ignore.

    The fact is, the majority of cord cutters cut all services except for internet. (Nobody cares about cable TV or phone service, especially since most everyone already has a cellphone.) Then they sign up for a select few streaming services that they like, probably Netflix, maybe Amazon or Hulu to round things out, and maybe a slim chance of signing up for a broadcaster run service if they have a show they really like.

    So, at worst, you're looking at around $100 for internet (potentially less depending on where you live, I pay $70 for 100/10), $10 for Netflix, $10ish for Amazon or Hulu, and maybe another $10 for something like CBS All Access. All told that is $130. $120 if you drop CBS. For me, it's sub $100. That's over $120 in savings every month. No matter how you look at it, cord cutting is ALWAYS going to be cheaper than traditional packages. Unless of course ISPs jack broadband rates up to $250 or higher across the board for only basic service, but I don't see that happening.

    The savings look even better when you consider that internet service is pretty much a necessity for the majority of people. That's pretty much become a given cost, like electricity, gas, or water bills. So you can write that off as just cost of living. Now you're looking at $30 of streaming entertainment services, compared to $250 traditional cable. You would even have room within that to sign up for practically all streaming services and STILL save money.

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